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ALIBABA GROUP HOLDING LIMITED

(BABA)
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Alibaba Shares Rise in Hong Kong Despite Record $2.8 Billion Fine -- Update

04/11/2021 | 11:02pm EDT

By Martin Mou

Alibaba Group Holding Ltd. shares jumped Monday, after China's antitrust regulator slapped a record fine on the e-commerce giant following a monthslong investigation.

Alibaba's Hong Kong-listed shares, which opened 5.5% higher, were recently 7.9% higher at 235 Hong Kong dollars, when most other leading Chinese tech stocks were down.

China's antitrust regulator on Saturday imposed a fine equivalent to US$2.8 billion against Alibaba for abusing its dominant position over rivals and merchants on its e-commerce platforms, coming amid a wave of scrutiny on the business empire of company founder Jack Ma.

What ran afoul of the law was a practice dubbed "er xuan yi" -- literally, "choose one out of two." The regulator said Alibaba punished certain merchants that sold goods both on Alibaba and on rival platforms, and ordered the company to stop unlawful practices.

Alibaba Chairman and Chief Executive Daniel Zhang said Monday that the company doesn't rely on the exclusivity arrangement to retain merchants and the arrangement only covered a certain number of stores.

"So business-wise, we don't expect material negative impact on the change of this arrangement," Mr. Zhang added.

Some analysts say the penalty could put an end to the regulatory uncertainty associated with the antimonopoly investigation into Alibaba that started late last year.

Market concerns about the investigation are likely addressed by the recent decision and penalties from China's State Administration for Market Regulation, Jefferies said, adding that this could foreshow "a new starting point" for Alibaba.

The 18.2 billion yuan fine is equivalent to 4% of Alibaba's domestic annual sales in 2019, according to the regulator. Under Chinese rules, antitrust fines are capped at 10% of a company's annual sales.

Citic Securities thinks this shows the penalty was modest and reflects the regulator's intention of using it as a warning to other tech giants of their potentially monopolistic business practices.

The financial impact of the fine looks manageable for Alibaba, which had a cash pile of more than CNY300 billion as of end-2020, the brokerage said.

Write to Martin Mou at martin.mou@wsj.com

(END) Dow Jones Newswires

04-11-21 2301ET

Stocks mentioned in the article
ChangeLast1st jan.
ALIBABA GROUP HOLDING LIMITED -6.65% 192.64 Delayed Quote.-11.26%
CITIC LIMITED 0.37% 8.03 End-of-day quote.46.27%
CITIC SECURITIES COMPANY LIMITED -3.05% 23.5 End-of-day quote.-20.07%
DJ INDUSTRIAL 0.05% 35074.5 Delayed Quote.14.56%
SUN ART RETAIL GROUP LIMITED -4.63% 4.94 End-of-day quote.-37.31%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 0.17% 6.4835 Delayed Quote.-0.34%
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Financials
Sales 2021 707 B 109 B 109 B
Net income 2021 166 B 25 583 M 25 583 M
Net cash 2021 418 B 64 455 M 64 455 M
P/E ratio 2021 22,3x
Yield 2021 -
Capitalization 3 629 B 560 B 560 B
EV / Sales 2021 4,54x
EV / Sales 2022 3,42x
Nbr of Employees 251 462
Free-Float 89,8%
Chart ALIBABA GROUP HOLDING LIMITED
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Alibaba Group Holding Limited Technical Analysis Chart | BABA | US01609W1027 | MarketScreener
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Mean consensus BUY
Number of Analysts 51
Last Close Price 1 338,48 CNY
Average target price 1 871,38 CNY
Spread / Average Target 39,8%
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Managers and Directors
Yong Zhang Executive Chairman & Chief Executive Officer
John Michael Evans President & Director
Wei Wu CFO, Director & Head-Strategic Investments
Li Cheng Chief Technology Officer
Chee Hwa Tung Independent Director
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